The impact of company human resource policies on social skills: Implications for training sponsorship, quit rates and efficiency wages

Abstract

The concept of a firm's human capital is reconsidered to include both the technical and the social skills of its workforce. Technical skills are defined by the ability to turn inputs into outputs, and measured by the productivity of unit labour effort. Social skills are defined by the propensity to behave in a manner conducive to the firm's objectives. In other words, social skills are constituted as the norm of effort contribution to which an individual assents, and are measured by observed motivation and behaviour. The existence for firms of a labour management function is proposed and supported, relating social skills to human resource policies. Implications for the labour market are that: (i) firms pay for general training and, at the same time, wages do not necessarily increase with training; (ii) human capital acquisition may not lead to an increase in quitting, even controlling for wages; (iii) human resource policies substitute for efficiency wages or for employee monitoring; and (iv) economies with high organisational commitment have low equilibrium unemployment rates.